Wine sales continue to grow; after seven years of oversupply wineries are beginning to offer contracts to plant new vineyards; and the industry is financially solid overall, experts said Wednesday during the nation's largest wine and grape trade show.

Not all is bubbly, however. Sales of high-priced wines have slumped as wine drinkers turn to less-pricey labels, and consumers and businesses cut back on restaurant dining, the experts said. The short supply of California grapes means the industry could lose market share to imports. And wine officials railed against an excise tax increase on alcoholic beverages - proposed as one measure to ease the state's budget deficit - saying it would devastate sales of the lowest-cost wines.

Imagine trying to sell Two-Buck Chuck as Two-and-a-half-buck Chuck.

Stephen Kautz, president of Ironstone Vineyards in Murphys and whose family's Kautz Farms is one of the largest winegrape growers in the Lodi area, said he's excited to see wine supply and demand come back into balance. He also reported that his winery's sales, after slumping in November, recovered well in December and January.

"I'm seeing a few positive signs out there," he said Wednesday morning after listening to the industry experts address an estimated 1,400 attendees at the Unified Wine and Grape Symposium.

Consumers turning to wines at $10 a bottle or less is a positive for Mark Chandler, executive director of the Lodi-Woodbridge Winegrape Commission.

"Those are the wines that the majority of our grapes already go into," he said from trade show floor at the Sacramento Convention Center.

"Frugality now has become an American culture," said Jon Fredrikson of Gomberg, Fredrikson & Associates.

He reported wine shipments from Napa and Sonoma County warehouses, which handle much of the state's most expensive labels, fell sharply from July through November. At two locations, shipments in November alone were down nearly 40 percent from the year before.

Overall, however, Americans continued to buy more wine.

Wine shipments to the U.S. markets rose slightly, by about 2 million cases, in 2008 to an estimated 316 million cases, said Fredrikson, who tracks wine sales trends. And California wineries enjoyed even bigger gains, as shipments grew by nearly 4 million cases last year. That offset a decline in imported-wine shipments, down 2.7 million cases, as exchange rates made them more expensive to American consumers.

There are several factors that could affect that growth, he cautioned.

The economy is one big unknown, as a long and deepening recession might eventually cut into wine sales.

Negligible expansion of California's vineyards, due to the long slump in winegrape prices, is another threat. If the state's wine industry cannot keep pace with higher demand, it could lose out to other producers.

And Fredrikson led the charge against Gov. Arnold Schwarzenegger's so-called nickel-a-drink tax.

"We definitely do not want this dumb excise tax," he said.

He argued the actual tax would be much higher than a nickel a drink and be particularly devastating to low-cost jug wines.

The state would collect $1.69 in tax on a 5-liter box of wine, Fredrikson said. But because it would be levied at the winery level, distributor and retail markups would boost the impact to between $2.54 and $3.38 per box. That represents a price increase of 42 percent to 56 percent on 5-liter box that currently retails for $5.99, he said.

Nat DiBuduo, president of the Fresno cooperative Allied Grape Growers, said California's modest 2008 grape crop, with about 2.9 million tons "at best" being crushed for wine, had helped bring the long grape oversupply into balance.

"We can experience managed growth over the next decade," he predicted.

However, while wineries are beginning to offer contracts for new vineyards, DiBuduo cautioned prices still fall short of what growers need to cover all their expenses and make some profit.

Randall Lange, a principal at LangeTwins Winery & Vineyards in Lodi, said he needs better prices to cover the investment in planting and land, as well as annual cultivation and harvest costs.

Sustainability advocates usually focus on farming in ways that preserve the environment and protect employees, which Lange endorses.

But, he added, "It also has to be economically sustainable."

Chandler, whose commission is supported by an assessment on grapes produced in the Lodi region, agreed.

"Growers won't plant any more grape vines until they know they're going to get a good return on their grapes," he said. "It's time for the growers and the wineries to get together and take advantage of the opportunities that are right in front of us."